China strives for its own global mega-brands
By Jayanthi Iyengar
The Chinese are envied for excellence in many fields. In the United States, however, manufacturers are afraid of what they call the Chinese "blight", which is sweeping their shelf space, flooding it with value-for-money products. But still, if one were asked to recall a Chinese brand of global standing, few names spring to the mind in the league with Coca-Cola, Microsoft or McDonalds. It is this failing that the Chinese now hope to address as they relentlessly march forward on many other fronts, leaving their footprints on new-generation sciences, cutting-edge technologies, the moon and the outer space beyond.
Two Chinese companies are particularly at the forefront the Chinese effort to go global. They are Chinese consumer electronics giant Haier and China's biggest computer manufacturing firm, Lenovo (formerly Legend). Both these Chinese companies plan to use the 2008 Olympics as a springboard to create a global recall and brand recognition for their products.
In anticipation of the Olympics, China's largest PC manufacturer Legend has undergone the name change. Also, early this year, it signed up as a sponsor for the 2008 Summer Olympics in Beijing, "The change of our English brand name (from Legend to Lenovo), and our participation in the sixth generation of The Olympic Partner (TOP) Program of the International Olympic Committee announced recently will be of great significance in the group's international business development and brand promotion," Yang Yuanqing, president and CEO of the Lenovo group, told Asia times Online.
Though wary of revealing the surprises it plans to spring at the Olympics, the company broadly indicated that it would like to use the opportunity offered by the event to etch the company's brand name on the international consumer consciousness. Haier's CEO Rumin Zhang, who has equally ambitious plan for his company, candidly told Asia Times Online, "We know there is a long way to go." Haier, China's small refrigerator brand, has been repeatedly rated as one of China's most valued brands and was voted one of the world's 100 most influential by World Brand Lab in January.
What makes a global brand? It is difficult to say what endears a product to consumers, or why Asian brands have largely not been able to carve out a place for themselves among global brands, but if one looks at the list of top global brands, several things are clear:
A global brand can be created out of any product;
It is difficult to predict the winning mix for a global brand though it broadly seems to be a combination of goodwill, quality and lifestyle;
Most global brands are from the West, with some exceptions from Japan.
While many may like to believe that a rose by any other name still a rose and smells as sweet, global manufacturers know that branding could make a difference between million- and billion-dollar businesses. Coca-Cola, which is ranked as the world's most valuable brand by Business Week and global brand consultants Interbrand, is reportedly valued at US$70.45 billion. Microsoft, the first runner-up in the Top 100, is valued at $65.17 billion. Other known brands include Nescafe, Kellogg's, L'Oreal and Kleenex - clearly proving that there is no magic prescription to deciding the winning product-branding mix.
In Asia, though countries have been moving forward in creating production bases for most of these well-known global brands, they themselves have not been able to generate names memorable enough for international recognition. Japan is the only country that has been able to beat this jinx, with names like Nintendo, Canon, Panasonic and Nissan making it to the list of top Asian brands on the international list. The sole exception to the rest of Asia is Samsung, the South Korean Electronics giant, which yet again goes to prove that Asia needs to do more for brand promotion. Also, the list highlights the fact that brand development may in some ways be closely linked to the economic development of the country in question as brand promotion and creation are a function of advertising and brand awareness budgets.
The Chinese debacle
Despite China's growing share in global manufacture and its growing clout as Asia's most sought after investment destination, there are many reasons for China's inability so far to create products worthy of global notice and recognition.. Professor Nan Zhou, who heads City University of Hong Kong's marketing department, refers to a paper he wrote nearly 10 years ago to illustrate the point, saying what he wrote then is still valid today.
In this paper, professor Zhou refers to three broad reasons. China started out as a socialist economy. Hence, for a long time, the focus was on more on managing shortages and on the supply-side rather than paying attention to product differentiation. The Chinese industry was used to mass production at that time, which did not help product differentiation - important for brand creation. Most importantly, however, the Chinese made as much money as being Original Equipment Manufacturer (OEM) contractors abroad as they would if they had been involved in developing products and creating brands. Hence, there was little incentive to chart this course.
This outlook has changed in recent years. The Chinese are today fired by the dream of being globally recognized. They would like to make a place for themselves among global consumers instead of limiting their reach to just their domestic markets. Resurgent China is also marked by pride, and it would like to shed the popular image of being a cheap, low-quality producer and become known as a high-end producer of goods for the global market. This is part of the transition from being the low-cost factory to the world to being a state-of-the-art producer of quality products.
The Lenovo experience
Let's look at what Lenovo is doing to create a global position for its brand. Lenovo has been China's largest-selling brand of PCs since 1997. It commands 27% market share in the Middle Kingdom (company's figures), while in the Asia Pacific (excluding Japan), it has a market share of 12.6%. At the turn of the century, the company decided to go global by creating a globally accepted name. In April, 2003, it formally announced its decision to re-christen its product Lenovo, forsaking the former brand name, Legend.
There were many reasons for this. One, of course, was the fact that the name "Legend" was registered in many countries where the group wanted to create a global presence. "On our way to become internationalized, we needed to have an English brand name that could be used unrestrictedly in markets worldwide in the first place. However, the original English brand name, Legend, had already been registered by others in many countries, making it essential for us to design and register a new English brand name. Although our business focus is still on China, expanding into the international market is an inevitable path with the globalization of the IT industry and for Legend's self-development. That is why we must take proactive action in our preparation," explained Lenovo group President and CEO Yang.
Thus the company settled for Lenovo, which combined its product's old name with its new aspirations and identity. "Le" was taken from Legend to indicate connection and continuity, and combined with the Latin word, "nova", which means innovation and novelty. "The two were combined into Lenovo, which represents 'an innovative Legend' and captures our essence as a highly progressive and innovative company," Yang said.
The company today believes that name reflects four of its brand attributes - trustworthiness, innovation and energy, superior professional skills and ease of use. "Adopting the basic tone of blue combined with a modern design with simplicity, Lenovo is a vivid representation of professionalism, technology, profoundness and wisdom," Yang said.
Following the positive response to the new name, the company decided to formally change its name to Lenovo Group Limited In April 2004. "The board of directors believed the alignment of the English brand name and the company name would help to raise the recognition and popularity of the brand," Yang said.
The sponsorship of the Olympics is thus the next milestone on the company's carefully orchestrated path to create a global brand name. The company can be expected to unleash unprecedented publicity in the run-up to and during the Olympics as it intensifies its efforts to develop international business and create global recognition and memory for the Lenovo name.
Jayanthi Iyengar is a senior business journalist from India who writes on a range of subjects for several publications in Asia, Britain and the United States. She may be contacted at jayanthiiyengar1@hotmail.com .
(Copyright 2004 Asia Times Online, Ltd. All rights reserved. Please contact content@atimes.com for information on our sales and syndication policies.)
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